The overly optimistic debt ratings provided by credit rating agencies (CRAs) and the lack of transparency about the rating process have been criticized by regulators and pundits for exacerbating the financial crisis. We conduct a mixed-design experiment exploring how two proposals advanced by...

Abstract: This study examines whether the perceived independence and financial expertise of audit committee members affect external auditors' exposure to legal liability. We use an experiment in which potential jurors make judgments about auditor independence and legal liability for a case...

We examine whether personality differences between the CEO and CFO influence audit fees. Audit fees should reflect engagement risk associated with a client. We use personality differences between the CEO and CFO as a proxy for potential poor communication, reluctance to share information, and...

The Sarbanes-Oxley Act (2002) required that firms disclose whether their audit committee has at least one independent financial expert. This study examines whether the independence and expertise of audit committee members lower the exposure of external auditors to legal liability. We use an...

We use plain-English, figures, and simple math to explain how to use path analysis to test for mediation and moderation. Many theories in accounting research can be conceptualized as mediated, moderated or moderated-mediation models to investigate both simple and complex hypothesized...

We investigate whether recognition on the face of the financial statements versus disclosure in the footnotes influences the amount that financial managers report for a contingent liability. Using an experiment with corporate Controllers and Chief Financial Officers, we find that financial...

Statement of Financial Accounting Standards No. 130 requires companies to report comprehensive income in a primary financial statement, but allows its presentation in either a statement of comprehensive income or a statement of stockholders' equity. In an experiment, we examine whether and how...

The Dodd-Frank Act requires firms to include a clawback or holdback clause in executive compensation contracts. Using an experiment, we examine how executives react to the enforcement of these clauses after a restatement. We find that executives generally reduced the riskiness of their financial...

We examine whether financial reporting quality improves after firms voluntarily adopt a compensation clawback provision. Clawback provisions allow companies to recoup excess incentive pay in the event of an accounting restatement, and are intended to ex ante deter managers from publishing...

We present 60 experienced credit analysts with financial information for two firms: one that mainly outsources production and one that does not. We find that analysts are better able to identify firm characteristics that make an outsourcer more creditworthy when those characteristics are...